While you are in the planning stages of starting your own property management company, you most likely are trying to keep costs down. In many industries and situations, this means employing as many DIY tactics as possible. Although this might seem like the best solution on the surface, the do-it-yourself path of starting a property management company can end up with new business owners who are frustrated, stressed out, and financially drained from trying to turn a profit.
Although start-up costs for property management companies are less than many other businesses, they include more than you might think. Here are some of the common costs for starting a property management company:
One of the first steps that you need to do when you decide to start a property management company is to form a limited liability corporation (LLC). You can have an attorney or accountant file this paperwork on your behalf, or you can file the relevant forms for your state on your own. Fees to form an LLC vary from state to state and you may choose a different structure for your business. Once you have filed your LLC, you will need to secure any permits or licenses required by the state where you want to start your property management company. These costs also vary greatly from state to state but are often no more than a few hundred dollars.
Like many other businesses, property management companies need office space to work and communicate with clients and tenants. You need a quiet space to work with computer equipment, a landline or VOIP phone line dedicated to the company, possibly a business cell phone, a good printer, possibly a fax machine, and a copier. If your budget and space allows, you should also have a separate meeting area or room that you can use as a meeting space. The cost of your office space will depend on whether you buy or lease, the size of the space, and its location. Expect to spend more than $1000 per month as long as your willing to compromise on your exact location in the city.
With today’s digital world, marketing doesn’t always involve loads of printed materials, but it still makes up a good portion of start-up costs for a property management company. You need leads for your prospective clients and tenants to turn a profit as quickly as you can, so your success greatly hinges on the quality of your marketing efforts and materials. You need a dynamic website that works well on mobile devices and desktops too and business cards at a very minimum. As you grow, you will need to continue to invest in advertising whether on the internet, television, radio, or billboards. Adding sales collateral such as brochures, eBooks or online quizzes with help you build a robust sales process. Expect marketing to cost you no less than $500 per month to play it safe.
Some startups want to avoid spending money on technology for their businesses. As a property manager, you need to spend the money to invest in the right software from day one. As your business grows, you need to be able to manage clients and tenants in an organized fashion. Not only does this save time and money, but it also gives you an advantage over other startup property management companies. The right software helps you gives your property owners the ability to get statements and receive quick payment. Tenants can make maintenance requests and pay their rent online, and potential tenants can search for properties and request showings. The software can range from thousands a month to nothing at all. We recommend checking out PM Rocket Tools, a free CRM built for property managers.
Above are only some of the costs of taking the DIY path when starting a property management company. The early phases of a business are rampant with uncertainty and startup costs. Even when using a business plan and following a set budget, you will find that costs will vary greatly, making it difficult to pin down exact costs. Purchasing a license through Property Management Pros will help eliminate a large portion of that uncertainty and help you on the path to success.
Contact Property Management Pros today and download our Cost Comparison Sheet to learn about how we can help you uncover the hidden costs of opening your own property management company.